Sanctions Evasion Reference

Correspondent banking

An arrangement in which one bank holds an account for another and provides payment and other services on its behalf, usually to give it access to a foreign currency.

also known as

correspondent account, nostro/vostro

reviewed

2026-08-20

Cite this page
APA 7 
Sanctions Evasion Reference. (2026, August 20). Correspondent banking. https://sanctionsevasion.org/reference/glossary/correspondent-banking/
Chicago 
Sanctions Evasion Reference. “Correspondent banking.” Last reviewed August 20, 2026. https://sanctionsevasion.org/reference/glossary/correspondent-banking/.
BibTeX 
@misc{ser-reference-glossary-correspondent-banking,
  author = {{Sanctions Evasion Reference}},
  title  = {Correspondent banking},
  year   = {2026},
  note   = {Last reviewed 2026-08-20},
  url    = {https://sanctionsevasion.org/reference/glossary/correspondent-banking/}
}

The date is when this page was last reviewed, not when it was first published.

Correspondent banking is how money crosses borders. A bank that has no branch in a currency’s home country holds an account with one that does, and settles its customers’ payments through it.

The correspondent’s exposure is that it serves its respondent’s customers without knowing them. It sees a payment instruction, not an underlying relationship. Every control in this area — due diligence on the respondent, restrictions on nesting, insistence on complete payment data — exists to compensate for that structural blindness.

Where this term is used

  • How is correspondent banking used to evade sanctions? — Using a chain of banks that each know only their own customer, so that a payment for a restricted party reaches a currency it could not access directly, without any bank in the chain seeing the whole transaction.
  • What are third-country bank accounts and how are they used? — Holding accounts in a jurisdiction unconnected to the restricted party, the goods or the contract, so that payments reach and leave the restricted economy without ever appearing to touch it.
  • What is trade misinvoicing? — Trade misinvoicing is misstating the price, quantity or description of goods on trade documents, so that value moves across a border in a direction and an amount the paperwork does not admit.
  • How are omnibus securities accounts used to evade sanctions? — Holding a sanctioned party's securities in a custodian's own name inside a pooled account shared with other clients, so the institution that can screen and block never sees who actually owns the position.
  • What are exchange-house and rahbar networks? — A parallel payment system in which Iranian exchange houses and bank-appointed rahbar companies use front companies abroad, mostly in Hong Kong and the UAE, to receive and pay foreign currency for sanctioned Iranian banks and exporters.

Related terms

  • Respondent bank — The bank that holds an account with a correspondent and relies on it to make payments or provide services in a currency or market it cannot reach directly.
  • Nested account — The use of a bank's correspondent account by that bank's own respondent institutions, giving unnamed third banks indirect access to the correspondent.
  • Wire stripping — Removing or altering originator, beneficiary or reference information from a payment message so that screening at an intermediary bank does not identify a restricted party.
  • SWIFT — A member-owned cooperative operating the messaging network banks use to exchange standardised payment and securities instructions internationally.

Sources

  1. Correspondent banking principles and guidance. The Wolfsberg Group, 2022.

All glossary terms